Indian equities seen as best asset class for fiscal 2011

Indian equities could be one of the great options for long-term investments and would give best returns in the next 12-months, Morgan Stanley Managing Director (India), Ridham Desai said at an Indian Association of Investments Professionals (IAIP) event held here. The IAIP, in an online survey, has also found that about 80 per cent of the respondents believed that the Indian equity markets could be the best asset class in this financial year followed by real estate and commodities, he said.

The survey also said that the respondents felt that the Sensex would rally by 50 per cent
this fiscal from its current 17,000-level on the back of an improving Indian economy. The 30-scrip sensitive index of the Bombay Stock Exchange closed at 17,634 yesterday.

In the current quarter (April to June), the 30-scrip sensex is likely to be at an aggregate Rs 36,000-crore, Desai said.  The Sensex would go up by 50 per cent this fiscal as banking firms, power, construction and manufacturing companies are likely to perform well. Cement companies with an USD 1-trillion capex plan would give a major boost to the Indian economy, noted economist and Managing Director of Oxus Research and Investments, Surjit Bhalla, said.

Several global manufacturing companies have started seeing India as the most sought-after destination, he said, adding there would be a good inflow in the number of FII investments and an allocation-shift from China to India going forward.

Generic Pharma, domestic FMCG and retail players and mid-size companies with high a Return on Equity (ROE) along with media and entertainment players could be strong and emerging players this financial year, he added.

The IAIP survey said that the young Indian population with more consumption power would drive the economy. The GDP is likely to be at 9 per cent this year, it said.
Food inflation would come down given the fact the Government has taken certain steps and will be opening more cold storages this year, the survey stated.

There could be some short-term challenges as the next 3-4 months will determine the trend of monsoon and the reported current account deficit, which could be a concern, it said. The survey also stated that people were quite optimistic in terms of salary and wages, which they feel would rise by 15 per cent.